The Research Of Negative Reputation Events Affect Stock Price Of Financial Institution

Capital market is an essential part of a country that needs good economic operation.It plays an important role in promoting financial diversification and regulating market capital flows.Financial institutions,as financial intermediaries,transmit information in capital market,connect suppliers and buyers,provide diversified financial services,and promote financial market stability and liquidity.However,in our country,there is an ongoing financial institution's illegal events affecting its reputation,which called reputation events.Now information can be quickly introduced and broadcasted into capital market,which could bring negative impact on financial institution's market value.Moreover,we need to know what type of events will have impact on financial institutions,which is very worth studying.This paper collects all kinds of events that influence reputation of domestic financial institutions.Using the method of event study and multiple regression analysis,this paper studies the effect of negative reputation events on domestic financial institutions' stock price,further analyzes of the impact of different types of negative reputation on financial institutions,then draws the following conclusions:1.Negative reputation events do have negative effects on stock prices of financial institutions,but the degree of impact is not the same.Meanwhile,The probability of event information being leaked in advance is low,but the possibility of information delay effect is higher.2.The banking industry is affected by negative reputation events on the day of the event,and the stock price may be adversely affected in the next few days,but the degree of impact is diminishing.3.After subdividing the banking industry into state-run joint-stock banks and commercial banks,the impact of state owned joint-stock banks is different from that of commercial banks.Compared with state-owned shareholding banks,negative reputation events have less negative impact on commercial banks' share price.4.Negative reputation events will not affect the stock price of securities companies on the bulletin board,however,after the announcement of the event,the stock price has a negative impact.The effect of litigation case is different from the CSRC's punishment.5.Negative reputation event has little effect on the share price of insurance company.6.A single negative reputation can have a detrimental effect on the industry.7.Different types of reputation events do not have exactly the same impact on the financial institution's share price.